Ha. We were suspicious in back in 2005 when Edhec-Risk, an asset management research company, issued a report, “Hedge fund industry: is there a capacity effect?” which examined whether various hedge fund strategies were becoming too crowded for the managers for the managers to earn excess returns. And excess return (meaning earning more than the […]
Read more...Mark Thoma has a good post about the discussion on Hamilton Project director Jason Furman’s health care proposal, which in a nutshell argues that the way to lower health care costs is to have consumers bear more of the costs. That’s the thinking behind Health Care Savings accounts,but Furman tweaks the idea, deeming the original […]
Read more...I always take note when a writer takes a position that is contrary to his usual stance. Tyler Cowen of Marginal Revolution is an intelligent and thoughtful commentator, but hews too closely to free market orthodoxy for my taste. But his review of Maggie Mahar’s Money- Driven Medicine, a hard-hitting critique of health care, American […]
Read more...In her Sunday New York Times column, “‘For Sale’ May Mean ‘You Lose’,” Gretchen Morgenson notes in passing that bankruptcies don’t get as much attention as sexier mergers or IPOs (and it’s confirmed by the dearth of comment on the usual suspect sites in the blogsphere). But there is a lot of money made in […]
Read more...This comment came from a reader in response to our post “The Private Sector Isn’t Always Cheaper/Better (Student Loan Edition)” which discussed the fact that the student loan program administered through banks costs $7 more per $100 loan than loans provided directly, and what an incredibly rich fee/expense level that was for a debt product.I […]
Read more...Ah, but it’s a good rant, colorful and defensibly reasoned, by Angry Bear reader OldVet, “Taking the other side of Trade – what’s free and what’s not.” He makes a valid core observation: free trade hasn’t delivered the goods (at least for the US) that it was alleged to, and that is at least in […]
Read more...Supposedly, the reason that sophisticated investors like pension funds and endowments pay 2% management fees and 20% upside fees (and sometimes more) to hedge funds and private equity funds (and higher-than-index-fund fees for long equity managers) is that they are buying “alpha,” which is the manager’s ability to beat the relevant market. (To be more […]
Read more...We found Yale economist Robert Shiller’s article, “Fears, Not Facts, Drive Global Markets,” thanks to Economist’s View. As much as we agree with Shiller’s conclusion (as author of the book “Irrational Exuberance,” he is considered an expert), that the size and seeming suddenness of market declines can feed on themselves, we don’t agree with the […]
Read more...This article by Robert Franks, a Cornell economist, in today’s New York Times gives several simple but compelling examples of how conservative ideology is internally inconsistent. Conservatives like to claim that keeping government small is pro growth and makes us all better off, at least in a financial sense, by giving us a bigger economic […]
Read more...I trust readers don’t mind the high proportion of Financial Times stories today. You’ve probably figured out that the FT often runs stories that don’t get reported in the US. While the title of this post is a bit of a mouthful, the concept is pretty simple. As you know, the pricing of risky credit […]
Read more...As we’ve noted, Wall Street firms have been investing in various means of profiting from likely future regulation of carbon emissions, particularly carbon trading. A study by Dr. Robert Shapiro, undersecretary of Commerce in the Clinton Administration (which we found thanks to Greg Mankiw’s blog), concludes that carbon taxes would be more effective than emissions […]
Read more...Barry Ritzhold of the Big Picture has had a run of posts lately on topics near and dear to my heart. He has written before on the subject of prediction markets, and his latest comment, on a particularly wrongheaded story in the New York Times, makes some important observations about markets in general. This topic […]
Read more...An informative article in the current Economist on the dangers and economic distortion created by the carry trade, a topic we’ve discussed. On a massive scale, investors, typically hedge funds, are borrowing in yen, a currency with very low borrowing costs, and investing in currencies where the interest rates are high, like the New Zealand […]
Read more...There’s an old saying in poker: if you are playing the game and you don’t know who the mark is, that means it’s you. Given that investment banks like to recruit successful poker and blackjack players as traders, one has to imagine that the ability to play a chump is a useful skill in both […]
Read more...An excellent post by Mark Thoma in his Economist’s View, which although it was prompted by a post about Ayn Rand, could just have easily been in response to the New York Times’ lead story today, “In Washington, Contractors Play Biggest Role Ever.” Thoma discusses what markets are good for (efficiency, not equity), and what […]
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